Stocks pulled back as weak economic data from Germany and China continue to worry investors. The Dow fell triple digits but rallied into the close to end the day with a 22-point loss on light trading volume at 25,450. For the week, the Dow is down 2.4% and year to date is up 9%.
The February jobs report came in shockingly low as expectations for 180,000 new jobs gave way to only 20,000 new jobs being reported. The big reason for the miss was a decline in construction and retail jobs. The gurus were puzzled, but the feeling is that a wait and see attitude is needed since other economic data related to the consumer and business investment continues to show positive trends. Within the labor report the unemployment rate dropped to 3.8% and the most encouraging part was a 3.4% rise in wages which is the highest reading in a decade. With wage growth strong and inflation tame the buying power of the consumer remains sound.
Costco (“Costcos” as my Mother in law called it) reported strong earnings. The company had better than expected same store sales growth and reported an increase in revenue of 7.3% and a gain in bottom line profits of 42%. Online e-commerce sales were up 25% as the company continues its steady path of growth and profitability. Shares of Costco were up 5% today on the news.
After ending 2018 on a disappointing note, home building rebounded sharply to start the new year. Housing starts advanced 18.6% in January, the largest monthly gain in over two years. Even more impressive, this was primarily due to a 25.1% surge in single-family construction which was the largest monthly gain for that series since 1979.